The
high cost of lowlife neighbors

Dear
Steve,
My husband and I purchased a condo eight months ago, and according
to a recent appraisal, the property has increased in value by $40,000.
Unfortunately, I've had bad experiences in the neighborhood and
with our immediate neighbors. We're at a crossroads. How do we determine
if it's feasible to sell so soon? -- Gwendolyn

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Dear
Gwendolyn,
You may have answered your own question. From what you say, there
may be no better time than the present.

But there are a couple of things to think about first.

Ordinarily, I wouldn't recommend selling this soon
under anything but the most dire circumstances. That's because your
selling costs might put you below the break-even mark in the deal.
But you indicate that you had a recent appraisal valuing the condo
at $40,000 more than it was originally priced. Assuming you can
fetch that much for the unit -- or at least close to it -- that
would more than compensate for those expenses.

However, remember that a home's real value is always
what someone will pay for it, regardless of what appraisals or tax
assessments have been performed there. So, before you put it on
the market, have an agent do a comparative market analysis to better
indicate its true market value.

If the problem is noise or other nuisance issues within
the complex, have you taken these up with the condo board?

There may be an open forum during regular condo board
meetings where you can voice you concerns. If there are security,
noise or harassment issues in the neighborhood, your local police
department should be notified.

There's also a tax issue to consider.

The tax breaks involved in owning real estate are
among the better reasons to invest in real property. But only if
you make use of them. Gain on the sale of real property is categorized
between long and short term, based on the date it is acquired and
the date it is sold.

If you sell your condo that you've lived in for
at least two years, you pay no tax on the first $250,000 of profit
-- or $500,000 if you're married.

If you sell after you've owned it more than one
year and a day, but have not used it as your primary residence
for at least two years, your profit will be taxed as long-term
capital gains -- 15 percent.

But selling in your situation could lead to the
highest possible amount of tax on your profits. If you sell before
owning it at least one year, it's considered a short-term capital
gain and it's taxed as ordinary income -- which can be as high
as 35 percent.

Do the math before making your final decision. Closing
costs, real estate agents, advertising and taxes could eat up a
great deal of the profit you think you will walk away with.

I get the feeling you value your independence and
privacy to the point where a condo might not be for you, unless
you are henceforth willing to do a lot of research and ask a lot
of questions of -- and about -- your prospective neighbors. As you've
discovered, your serenity level in a condo, co-op, apartment or
duplex often hinges greatly on the habits of your immediate neighbors.

Consider moving to a small-lot single-family house
in an area with low crime rates. Real estate agents or your local
city hall can tell you where to find the information.